Selling or Closing Your Business Legal Issues
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What Steps Must I Follow to Close My Business Legally?
There are five steps to follow to close your business legally:
1. Vote to close the business
2. File appropriate dissolution documents with the government
3. Cancel permits, licenses, and fictitious business names
4. Pay your taxes and debts
5. Notify your creditors, employees, and customers
Vote to Close the Business
As a sole practitioner, the decision is yours. If the business has been conducted as a LLC, corporation, or partnership, you must follow either the rules for dissolution that were originally decided upon or the rules provided by state law for dissolution.
Dissolve the Business with the Government
File the government's required dissolution documents to eliminate liability for business taxes and other filings in your state. Doing so puts creditors on notice that your business can no longer acquire business debts. These dissolution procedures vary by state, most requiring form filings.
Cancel Permits, Licenses, and Fictitious Business Names
No matter what kind of business you have, you should cancel any permit or license you hold with the state or county. If you don't, you could remain responsible for any taxes and penalties suffered after business is dissolved. Contact the issuing agency.
Pay Your Taxes and Debts
If you have employees, make all final payroll tax deposits and file all final paperwork and prepare final paychecks for last day of business. IRS forms are available for notifying the federal government and your state government regarding the dissolution of your business and not to expect the filing of future tax returns. A lawyer may be a useful resource when dealing with these tax issues.
Notify Your Creditors, Employees, and Customers
These specific parties require notification that you will be dissolving your business:
- Suppliers - Notification for last delivery and any returned goods
- Service Providers - Utilities, business insurers, and payroll preparers will want to know the final day of needed services and where to send a final bill
- Lenders - For purposes of business collateral and paying loans off
- Bank Accounts and Credit Cards - Close accounts and cancel cards
- Employees - Notify them of the last day
- Customers - Fulfill any remaining contractual obligations
- Landlords - Provide 30 days notice
Should I Consult a Lawyer When Selling a Business?
Selling a business consists of many negotiations and contracts. An attorney can assist you in the negotiation process to help you get what you want for your future business. An attorney can also help you sift through financial documents like business acquisition agreements to determine what is relevant to the sales transaction. A lawyer can also arrange the real estate sales process, should you ultimately wish to buy or sell the business property.
Consult a Lawyer - Present Your Case Now!
Last Modified: 04-04-2014 11:03 AM PDT
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